WORLD TRADE  
ORGANIZATION  WT/REG217/M/1 
1 May 2009 
 (09-2132) 
Committee on Regional Trade Agreements 
Fifty-third Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
THE EFTA STATES AND THE REPUBLIC OF KOREA, 
GOODS AND SERVICES  
 
Note on the Meeting of 20 April 2009  
 
Chairman: Mr D. Brauns (Germany) 
 
 
1. The meeting was convened in document WTO/AIR/3332/Rev.1, dated 1 April 2009. 
2. Under Agenda Item C.IV of its 53rd Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) took up consider ation of the Free Trade Agreement between the 
EFTA States and the Republic of Korea, (goods and services), (hereinafter referred to as "the 
Agreement").   
3. The Chairman  noted that the Agreement had entere d into force on 1 September 2006 and had 
been notified to the WTO on 23 August 2006 under Article XXIV:7(a) of GATT and the 
Understanding on the Interpretati on of GATT Article XXIV as an Agreement establishing a free trade 
area (document WT/REG217/N/1), and under GATS Artic le V:7(a) as an Agreement providing for 
the liberalization of trade in services within th e meaning of Article V of the GATS (document 
S/C/N/373).  The text of the Agreement, together with its Annexes, was available on the Parties' 
official websites.  The Factual Presentation on the goods and services aspects (document 
WT/REG217/2, dated 19 December 2008) had been  prepared by the Secretariat on its own 
responsibility in full consultation with the Parti es, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreement had been recently distributed in document 
WT/REG217/3, dated 8 April 2009.  He proposed to organize the consideration of the Agreement by 
asking first the Parties and then other Members to  give any general comments.  The Committee would 
then to turn to the specifics of  the Agreement using the Factual Presentation to guide the debate.  
Given that the goods and services aspects of the Agreement were dealt with in a single Factual 
Presentation, he proposed to go through the Factua l Presentation by section and then through the 
questions and replies document. 
4. The representative of Korea  thanked all delegations for partic ipating in the consideration of 
the Agreement and the Secretariat for the Factual Presentation.  He also thanked the EFTA delegation 
for its close cooperation and assistance in the pro cess of preparing for the meeting.  The Parties 
believed that the Agreement was fully consistent w ith the WTO principles and rules of "substantially 
all the trade in goods" and "substantial sector al coverage in services", pursuant to GATT 
Article XXIV and GATS Article V, respectively.   The Parties had achieved a high level of 
liberalization of trade in goods in terms of tariff elimination.  On non-agricultural products, which 
accounted for 96% of the value of trade between the Parties, Korea had agreed to eliminate duties on 
all products over a maximum period of seven years, af ter the entry into force of the Agreement, with 
91.1% of these products becoming duty-free upon the entry into force of the Agreement.  On fisheries WT/REG217/M/1 
Page 2  
 
  and processed agricultural products, Korea would rem ove tariffs on 88.4% and 86.1% of tariff lines 
and imports from the EFTA States, respectively by  the end of ten years (i.e. 2016).  On basic 
agricultural products, three separate bilateral ag reements between the individual EFTA States and 
Korea covered products of export interest to the Parties.  
5. In services, the Agreement covered 11 out of 12 sectors under the Services Sectoral 
Classification List (document MTN.GNS/W/120) and all four modes of supply.  The Agreement 
achieved liberalization beyond the Pa rties' existing GATS commitments.  As stated in the Factual 
Presentation, Korea had made commitments exceedin g those under GATS in sub-sectors such as legal 
services, veterinary services, and research and de velopment services in the natural sciences.  In 
addition to market access commitme nts, the Agreement also sought transparency and legal certainty 
in trade and investment.  On rules of origin, the Agreement had established clear and predictable 
criteria for determining a good's eligibility for prefer ential treatment.  To further facilitate trade, the 
Agreement provided for customs procedures to streamline and accelerate border processes.  The Agreement on Investment established up-to date , robust disciplines that provided an open and 
predictable environment, as well as strong protection for investment.  There were also provisions on 
government procurement, intellectual property an d competition policy.  Regarding government 
procurement, the Parties had agreed to an "ear ly harvest" implementation of the outcome of the 
ongoing negotiations on the WTO Agreement on G overnment Procurement (GPA).  For the 
protection of intellectual property rights, the Par ties had committed to high standards beyond those of 
the TRIPS Agreement.  For example, while the TR IPS Agreement protected industrial design for ten 
years, the Agreement extended protection to 15 year s from the date of registration.  The Agreement 
also regulated anti-competitive activities, not yet addressed in the WTO.  After over two years of 
implementation, the Parties believed the Ag reement had provided positive results.   
6. Since the Agreement had entered into force in  September 2006, bilateral trade had almost 
doubled.  In 2008, Korea's main exports to the EFTA States had consisted of ships, boats and floating 
structures, vehicles and electrical machinery.  Th e main exports by the EFTA States to Korea had 
been machinery and mechanical appliances, pharm aceutical products and minerals.  Korea believed 
that the Agreement had played a substantial role in contributing to growth in bilateral trade in goods 
and services and investment, laying a foundation for the Parties to develop a strong economic 
relationship. 
7. The representative of Norway
, on behalf of the EFTA States, thanked the Secretariat for its 
support and for the Factual Presentation, which provi ded a comprehensive and informative overview 
of the Agreement.  She thanked Korea for its exce llent and close collaboration in preparing for the 
Agreement’s consideration.  Th e Agreement was EFTA’s second FTA in the Asian region, after the 
one with Singapore.  As the economies of the Part ies were highly export-oriented, the potential to 
enhance trade and investment between the Parties through a free trade agreement was important.  Bilateral trade in 2008 were under US$5 billion, w ith EFTA’s exports to and imports from Korea 
accounting for US$3.5 billion and US$ 1.5 billion, respectively.  Growth in bilateral trade had been 
consistent in recent years, averaging annually 18% since 2003.  In 2008, despite a slowdown in trade 
in response to the current financial turmoil, bila teral trade had grown by 15%.  Korea had been 
EFTA’s fourth largest import source and export destin ation in Asia in 2008 (after Japan, China and 
Hong Kong, China).  Key EFTA imports from Kor ea included vehicles and electrical machinery, 
while the main products exported from the EFTA States to Korea comprised machinery, 
pharmaceuticals and optical/medical instruments.   Korea was an important partner for the 
EFTA States not only for goods, but also for services and investment.  The stock of foreign direct investment in Korea held by the EFTA States wa s approximately US$3 billion in 2007, reflecting the 
complementary nature of their respective economies.  For example, in shipbuilding, a long-established 
industry in Norway and Korea, Norwegian ship-g ear companies supplied the shipbuilding industry 
worldwide with highly specialized and advanced pa rts as well as competence and technology.  Korea 
was an important partner for Norway with extens ive relations between the Norwegian and Korean  WT/REG217/M/1 
 Page 3 
 
 
  business communities and a number of Norwegian co mpanies were well established in the Korean 
market.  Another example was machinery, for wh ich Switzerland and Korea provided each other with 
either engineering services or high technology parts and components for the machinery industry whose products were then sold worldwide.   
8. The Agreement provided for effective market a ccess for non-agricultural products in terms of 
tariffs and rules of origin.  All Korean non-agri cultural exports to the EFTA States had enjoyed 
duty-free access as of the entry into force of the Agreement in 2006, while almost all non-agricultural 
products originating in the EFTA States would en joy duty-free access to Korea by 1 January 2013.  
All export restrictions were prohibited.  She pointe d out an error in Table III.2 on page 14 of the 
Factual Presentation with regard to the tariff lin es excluded from elimination by Norway.  Since all 
the EFTA States had liberalized all non-agricultura l products as of the entry into force of the 
Agreement, the two lines concerned had also been lib eralized.  Fish and other marine products were 
granted duty-free access by the EFTA States.  The Agre ement provided for the lowering of tariffs and 
tariffs within quotas for EFTA exports of fish and ma rine products to Korea with full elimination of 
duties at the latest by 2016.  Tr ade in basic agricultural products  was covered by three bilateral 
agreements.  Liberalization ensured that an additi onal 81.3%, 3.6% and 73.9% of imports by Iceland, 
Norway and Switzerland had become duty free.  Over all, only 0.5%, 0.1% and 0% of, respectively, 
Norway, Switzerland, and Iceland’s total imports fr om Korea remained dutiable.  On intellectual 
property rights, the Agreement set a high standard for protection, including for patents, trademarks 
and copyright.  The WTO's GPA governed the rights and obligations of the Parties and the Agreement 
had allowed also for an ‘early harvest’ of the outco me of negotiations on the GPA.  Trade in services 
was particularly important for the Parties as the sector accounted for 68.5%, 56.8%, and 64% of the 
GDPs of Iceland, Norway and Switzerland, respectively.  Thus, development of trade in services with Korea had been an important element during the nego tiations and was reflected in the dynamic nature 
of the Agreement.  Moreover, the Parties had co mmitted to review their schedules of commitments 
and lists of MFN exemptions regularly every two years.   
9. The representative of the United States
 thanked the Parties and the Secretariat for the 
information provided on the Agreement.  She re cognized that coordination among multiple parties 
was not easy.  The United States noted that for goods Norway had eliminated duties on 90.3% of all tariff lines, covering 99.5% of imports from Korea.   However, although 99.9% of non-agricultural 
tariffs had become duty-free, tariffs on only 49 .3% of agricultural lines had been eliminated.  
Switzerland had eliminated tariffs on 84% of all ta riff lines, covering 99.9% of imports from Korea.  
However, although 99.98% of duties on non-agricultur al products had been eliminated, tariffs on only 
34.8% of agricultural lines had been eliminated.  I celand had eliminated duties on 94.9% of all tariff 
lines and on 100% of imports from Korea.  However,  although 100% of non-agricultural tariffs had 
become duty-free, only 76.3% of agricultural tari ffs had been eliminated.  Korea would provide 
duty-free access by the end of the implementation pe riod for 89%, 88.7% and 88.5% of its tariff lines, 
accounting for 99.1%, 93% and 98.6% of the value of  imports from Iceland, Norway and Switzerland, 
respectively.  However, although 99.6% of non-ag ricultural products would become duty-free for 
Norway, Switzerland and Iceland, Korea would pr ovide duty-free access on its agricultural products 
for 21.4% of its tariff lines for Norway, 19.6% for Switzerland and 23.3% for Iceland.  The Parties’ highly disproportionate liberalization between non-ag ricultural and agricultural products was quite 
disappointing.  It was unclear how such a minimal c overage of agricultural products could qualify as 
fulfilling the "substantially all the trade" requireme nt.  The United States were concerned that the 
continued and systematic protection of agricultu ral products amounted to the sheltering of an 
important sector of the economy from competition ma king efforts at multilateral liberalization more 
difficult.  She hoped that in the future the Parties would be able to undertake the trade liberalization 
that was required under GATT Article XXIV.  The representative of Korea
 replied that as noted in 
previous meetings of the Committee as well as in  a Report by the Appellate Body, WTO Members 
had not been able to reach an agreement on the defi nition of "substantially all the trade".  The absence 
of an agreed definition did not imply that it was en tirely up to the parties to determine the level of WT/REG217/M/1 
Page 4  
 
  liberalization that would meet the requirements of  GATT Article XXIV.  As the Appellate Body had 
noted in its Report on the Turkey-Textiles case, GA TT Article XXIV required the parties to an 
agreement to liberalize considerably more than merely some of the trade.  The Parties were also of the 
view that the substantially all trad e threshold should apply to overall trade rather than to individual 
segments of trade, and therefore the Agreement met the requirement of "substantially all the trade" 
and was consistent with GATT Article XXIV. 
 
10. The Chairman  noted that the consideration of the go ods and services aspects of the Free Trade 
Agreement between the EFTA States and Korea ha d allowed the Committee to clarify a number of 
questions and oral discussion of the Agreement coul d be concluded in accordance with paragraph 11 
of the TM.  If any delegations wished to ask follo w-up questions, they were invited to submit replies 
in writing by no later than 27 April 2009 and the Parties were asked to submit replies to the 
Secretariat no later than 4 May 2009.  In acco rdance with paragraph 13 of the TM all written 
submissions, as well as the minutes of this meeting woul d be circulated promptly, in all WTO official 
languages, and would be made available on the WTO website. 
11. The Committee took note  of the comments made. 
__________